Miten ydinvoiman lisääminen vaikuttaa Pohjoismaiden energiasiirtymään? – Markkinavoiman ja teollisuuden sähköistymisen tarkastelu tasapainomallin avulla

Several climate policy initiatives, including the European Green Deal, aim to decarbonise the energy sector and promote electrification to reduce greenhouse-gas emissions. As a result, the share of European electricity generated from variable renewable energy (VRE) sources, such as solar and wind, is growing. The increase in VRE will inevitably require infrastructure or generation alternatives to balance intermittency in production. One proposed solution is additional nuclear capacity, for which the Swedish government announced a subsidy mechanism in August 2025. This thesis evaluates the impact of potential nuclear expansion in the Nordic power market, with a particular focus on welfare, prices, and emissions. A Nash–Cournot equilibrium model is employed, which allows for the modelling of market power for selected producers and technologies. Four scenarios are considered: a baseline for 2023 and three future scenarios set in the late 2030s, capturing anticipated market changes, such as nuclear capacity expansion, industrial electrification, and VRE penetration. For each scenario, three market power cases are considered, including perfect competition as well as strategic capacity withholding by nuclear and hydropower producers. The results indicate that under perfect competition, nuclear expansion lowers average prices and emissions without significant changes to total welfare, while potentially crowding out some otherwise profitable investments in onshore wind. However, when introducing market power, the oligopolists' incentives to exploit strategic capacity withholding grow with the additional nuclear capacity, leading to a decrease in social welfare and an increase in emissions. Thus, in addition to the traditional risks related to nuclear, such as safety-related concerns and cost overruns in construction, the introduction of additional capacity may have adverse effects on the market structure and welfare metrics. Since the incentives for market power may grow considerably also for the hydro producers, any subsidised capacity expansion increasing market concentration should be accompanied by sufficient regulatory scrutiny towards all market participants.